Interview with Pete Williams

Two years ago I read a couple of books relating to the sports card and memorabilia industry: Card Sharks: How Upper Deck Turned a Child’s Hobby into a High-Stakes, Billion-Dollar Business and Sports Memorabilia for Dummies. Both books were written by Pete Williams, an author who covered sports business for USA Today Baseball Weekly from 1991-1998 and for Street & Smith's Sports Business Journal since 1999.

I enjoyed both books so much I emailed Mr. Williams in 2008, commending his work and asking if he still resided in Arlington, VA, which he did at the time of Card Sharks' printing. He promptly responded, saying that he left Northern Virginia years ago but invited me to call, which I never did.

Fast forward to 2010 and I am a graduate student at Georgetown University focusing my master's thesis on the decline of the sports cards industry. Who better to contact than Pete Williams? But upon visiting his website, I was suprised to see that Mr. Williams had not commented on the trading card industry in the past year, which prompted me to send him an email.

What resulted from our conversation was the following interview, which covers several aspects of the trading card industry as well as the sports industry in general. Mr. Williams' generosity, thoughtful insight, and prompt response is much appreciated. This interview can also be accessed on Mr. Williams blog.


Question 1. Have you bought a pack of cards in the past year? The past six months? Past month? Past week?

PW: I have not collected in many years. The one exception is I bought four boxes of never-opened, 1998 Fleer Ultra in November for $2 a box at a “garage sale” being held at the Toronto Blue Jays spring training complex in Dunedin, Fla., not far from where I live. I bought them for my kids for Christmas and the experience – chronicled in this blog – pretty much sums up the card industry.

http://www.petewilliams.net/blog/?p=546

Question 2. Have you played the new card game Adrenalyn by Panini? What about Topps Attax?

PW: I have not. Clever concepts, I suppose, but after two decades of shamelessly marketing your product to adults as a can’t-miss investment, there’s no way you can dust off the 1970s collectibles marketing strategy and expect it to work. You’ve lost a generation of kids, if not two. They’re more interested in Silly Bandz. Next year it will be something else, but not cards.

Question 3. Do you think card companies are doing the right thing by re-focusing on kids?

PW: I suppose, but I don’t see how it can work. For people of my age – Generation X – cards played a different role. I literally learned to read with baseball cards. They taught me math/stats and geography. I learned to alphabetize and put things in numerical order. I learned to save money for cards as they were priced reasonably at 30 cents a pack of 15-18 cards. Even adjusting for inflation and better printing technologies, there’s no way cards should cost more than $1.50 for a pack of 10 cards. Instead, it’s $3 or $4 for six to eight cards. What kid can afford that?

With no cable TV – my parents refused to subscribe – baseball cards were how I followed the game, along with through magazines and the daily newspaper. Those roles have been replaced by cable television and the Internet.

I have two young sons, and while they’re interested in many things that were big in the 1970s and early ‘80s – Star Wars, Legos, Scooby Doo, and the band KISS to name a few – they show no interest in cards.

Question 4. Do you think sports leagues are doing the right thing by granting exclusive trading card licenses? What do you think are the pros/cons?

PW: They have no choice. When card companies are unable to produce enough licensing revenue, the leagues will pull the plug, as they have. If they still were producing the revenue, they would continue to license countless card manufacturers. Sports leagues and their enablers – card companies, dealers, hobby magazines, etc. – have so watered down the word “exclusive” that it’s meaningless whenever used in this industry.

Question 5. Are there any hobby shops left in Florida? If not, where do you get your cards/memorabilia?

PW: Again, I don’t collect, though every so often I’ll take my sons into a card store to show them what things were like when I was their age. We have a few stores left here in the Sunshine State, though like everywhere else they’re increasingly difficult to find.

Question 6. You wrote a book, Card Sharks, in which you criticize Upper Deck’s business practices. Are you surprised, now 15 years after writing that book and 21 years since UD was founded, that UD now only has one major league license, the NHL? (well two if you count MLS)

PW: First, thanks for recognizing the 15th anniversary, which was Saturday. I’d like to clarify your question. I interviewed more than 150 people for that book, including dozens of former (and then-current) employees, officials from all four major sports leagues, and others involved in the industry. They painted a picture, along with thousands of pages of court documents, of a company that had reprinted its cards and engaged in business practices considered unethical in that industry. I didn’t criticize Upper Deck as one would in a magazine column or blog; I reported a story based on many, many sources.

Upper Deck, like the rest of the industry, tried unsuccessfully to evolve with the changing times. The bottom line is that Americans no longer collect anything like they did in the 1970s and ‘80s. Look at any collectible that was popular during that time – beer cans, coins, Lionel trains, Hummel figurines, Coca-Cola memorabilia – and you’ll find as much if not a steeper decline in interest.

I definitely would not count MLS as a major card license and I’m not sure I would count the NHL either. Love both sports, but they’re off the radar in this country when it comes to collectors.

Question 7. What do you think are the prospects for companies that don’t have a league license? (i.e. Upper Deck in baseball) Do you think collectors will be attracted to a product without team logos/league marks? If you were UD, how would you market your baseball product?

PW: There is precedent. Throughout the 1970s and ‘80s, the MLB Players Association employed Mike Schechter and Associates (MSA) as its licensing agent. MSA licensed player images to dozens of food manufacturers, who included cards of players with their food products. This being pre-Photoshop, the logos were airbrushed. The cards looked kind of cheesy to begin with – Kraft’s Heavy Hitters! – and the obvious airbrushing made them look even worse. Still, the cards were popular since they were produced during the heyday of the sports card industry. That environment doesn’t exist today.

For 20 years there has been a modest niche market for draft-pick sets picturing players in street clothes or college uniforms. I imagine Upper Deck could go in that direction, but it would not be the same as having the MLB license to go with its MLBPA license.

Question 8. Do you still believe you should not get into the hobby with the primary purpose of making money?

PW: I have never believed people should get into sports memorabilia with any intention – primary, secondary or otherwise – of making money. I felt that way in 1981 (as a kid), in 1991 (as a young journalist during the industry’s peak), and certainly today. Like many markets, the people who made money in sports memorabilia did so accidentally. They held onto cards/memorabilia from the 1950s or before that they or a relative collected and when the market boomed in the early 1980s, they saw the benefit. It’s no different than people who owned homes in Silicon Valley or certain beach communities for decades and cashed out before 2008. They never intended to make a fortune on real estate; they just happened to live there. Yes, some card dealers did well in 1989-91 speculating on new cases of Upper Deck products, along with those of other companies. This was the industry equivalent of the 1998-2000 stock market. But those card prices were less legitimate than late ‘90s stock prices. When everything produced after 1975 is worthless, as it is today, there can be no doubt that “investing” in sports memorabilia is foolish.

For instance, if you buy $10,000 in some company’s stock today and it’s worth $10,000 next week, you can get your $10,000 back online in two minutes (minus a modest trading commission). If you purchase a piece of memorabilia for $10,000, it might take months for you to unload it and there’s no guarantee you’ll get anything close to your purchase price.

The MSNBC talk-show host Keith Olbermann, who is an avid collector and one of the leading authorities on the industry – I remember reading his columns in hobby magazines when I was 12 and he was 22 – gave me a great quote on this topic for a story I wrote several years ago. He said, “Acquire nothing you would not be delighted to keep for the rest of your life and never make a profit from.

Question 9. What do you see are the biggest challenges/opportunities for the hobby moving forward? Do you think the hobby has a future? (i.e. long-term in 15-20 years?)

PW: I don’t think the hobby has much of a future because interest in sports has peaked. Will the NBA ever be as big as it was in the early 1990s? Will Major League Baseball ever be as popular as it was in the late 1990s Steroid Era? Will the NHL ever recover from canceling the 2004-05 season? It doesn’t look that way.

Talk to people from the millennial generation (born after 1980) and you’ll sense little interest in professional sports. They’ll go to a game every so often if it’s a big event and perceived as the thing to do, which is why the NFL with its limited schedule will survive no matter how poorly it treats its fans with higher ticket prices, later start times, condoning drunken behavior in the stands, etc.

The Generation X crowd, which grew up huge sports fans, has drifted away because of the fast-paced technological society in which we live. We don’t have time to go to sports events and even if we did, it’s too expensive to take our spouse and kids. As recently as 1994, I had 12th row, center court season tickets, with parking included, to see the Washington Bullets for $26.75 per ticket, per game. Given the product and the arena, you still could argue I overpaid, but sports tickets have far, far outpaced inflation over the last 15 years.

My kids probably will not grow up professional sports fans, even though they’ve been to dozens of Tampa Bay Rays games and Florida State League contests. It’s a different world now and professional sports play less of a role. (Interestingly, they’re big NASCAR fans, in part because of the movie “Cars.” NASCAR gets it. They let you bring in food and non-alcoholic drinks. Kids get in free to the non-Sprint Cup events, such as the Nationwide Series and preliminaries. This might not sound like much, but let me know when MLB or the NFL discounts their meaningless exhibition games for kids. Best of all, NASCAR stood up to FOX and moved most start times back to 1 p.m. Eastern where kids – and working adults – can actually watch. Let’s see the MLB and the NFL take that stand.)

I’ve spent my career as a sports journalist. Working in that environment there’s a tendency to believe, as most sports fans do, that sports plays a bigger role in our society than it does. But the collectibles industry merely reflects the waning interest in sports.

I speak regularly to classes from kindergarten through college and I sense little interest in big-time sports – and I live in a market that has three major sports franchises, along with baseball spring training and, until recently, Tim Tebow.

The Tampa Bay Buccaneers, after years of fleecing fans and claiming a season-ticket waiting list of 100,000-plus, now have plenty of seats available and they’ve discounted to as little as $35 per game -- $25 for kids. It’s too late. Kids have grown up focused on other things.

Forget the card industry. That’s what should concern anyone running a sports league or franchise.

Question 10. Is Florida really THAT much better than Arlington, VA??? :-)

PW: Yes. It’s like the metaphor of the frog and the boiling water. Whenever I go back to Northern Virginia, with its insufferable traffic and unpredictable, gridlocked winters, I ask my friends why they stay. I guess there’s something to be said for working for the U.S. government.

Welcome to the GUSportsCards blog!

Hello,

By way of introduction, my name is Alex Hu-Kuebelbeck and I am currently a graduate student in Georgetown University's Sports Industry Management master's program. As part of my coursework, I have to do a thesis on a topic of my choosing.

For my "Capstone project" I have chosen to focus on the decline and resulting consolidation of the sports card industry, specifically analyzing the reasons for this decline and identifying best practices/opportunities for reviving this once $2 billion industry, which now operates at $200 million annually.

The purpose for this blog is to document important research, thought pieces, and milestones relating to my project.

I hope you will follow my progress throughout the semester!


Alex